Warner Bros. Discovery’s board has once again turned down a takeover proposal from Paramount and advised shareholders to stick with a competing offer from Netflix. In a communication to shareholders, Warner Bros.’ board characterized Paramount’s revised $108.4 billion US hostile bid as a risky leveraged buyout that investors should decline. They emphasized that Paramount’s offer heavily relies on debt financing, increasing the risk of completion. The board reiterated its support for Netflix’s $82.7 billion deal for the film and television studio and other assets, stating that it provides superior value with greater certainty and lower risks and costs for shareholders. Warner Bros. Discovery chair Samuel Di Piazza Jr. stated that the binding agreement with Netflix is the preferred option.
The battle for control over Warner Bros. has attracted competing bids from Paramount and Netflix, both eager to acquire the esteemed film and television studios and vast content library. Warner Bros. owns valuable entertainment franchises such as “Harry Potter,” “Game of Thrones,” “Friends,” and the DC Comics universe, along with classic films like “Casablanca” and “Citizen Kane.”
Paramount’s attempts to acquire Warner Bros. have been consistently rebuffed by Warner’s leadership, which has urged shareholders to support the sale of the streaming and studio business to Netflix. Paramount recently secured an “irrevocable personal guarantee” from Oracle founder Larry Ellison, backing $40.4 billion in equity financing for their bid. Despite enhancements like Ellison’s guarantee and a raised payout to shareholders if the deal faces regulatory issues, Warner Bros.’ board voted against Paramount’s $30-per-share cash offer, citing the substantial costs associated with Paramount’s proposal compared to the Netflix deal.
Netflix’s co-CEOs, Ted Sarandos and Greg Peters, welcomed Warner Bros.’ decision to favor their proposal, emphasizing the value it will bring to stockholders, consumers, creators, and the entertainment industry at large. Paramount’s response to the rejection was not immediately available, and their hostile bid remains open for Warner shareholders to consider until January 21.
The complexity of the situation arises from the differing objectives of Netflix and Paramount. Netflix aims to acquire Warner’s studio and streaming business, while Paramount seeks to acquire the entire company, including networks like CNN and Discovery. The potential mergers with either company will face intense antitrust scrutiny, potentially involving reviews by the U.S. Justice Department and other regulators globally. The involvement of politics, particularly under the administration of U.S. President Donald Trump, adds another layer of uncertainty to the outcome of the deals, which could significantly impact the entertainment industry, including movie production, distribution channels, and the news media landscape.